Behavioral Marketing – What’s all the Fuss About?

There’s a “new” form of online marketing that’s all the rage, and is getting a lot of press these days. Different people call it different things, including “Behavioral Targeting”, but for the purposes of this discussion we’ll call it “Behavioral Marketing”. The most interesting thing about this technique is that it real isn’t new at all.

Let’s talk about what Behavioral Marketing is, and isn’t. It’s not any great new marketing theory or technique. It’s really just another form of database or segmentation marketing. Marketers have been attempting to categorize and segment potential customers since the beginning of the free enterprise system. What’s really new and exciting about it is that it has couple age-old marketing techniques with web technology that enables the marketing segmentation to be applied more efficiently and accurately. As I stated in the headline, it’s all the rage, being used by brick and mortar companies like Best Buy in store design, and pure web companies like Yahoo, who utilizes their vast portfolio of free services to get a handle of what Internet surfers are really up to.

My personal focus is on Technology and Software Management and Marketing Techniques. Behavioral Marketing isn’t a technique specific only to the market served by PJM Consulting, since it is broadly applicable to any company marketing products or services online. But my client base of software and technology companies should have a special interest in this topic, since they tend to be early adopters of leading edge technologies, such as utilized in this technique.

BEHAVIOR, NOT APPEARANCES OR LOCATION

In the context of online activity, behavioral marketing is the technique of targeting consumers based on their behavior online, rather than by simply the content of pages they visit, or the demographic characteristics of the prospect. For example, the prospect’s surfing habits might cause them to be grouped into a category of active car shoppers, or a different category of engaged women planning a wedding in the very near future–or both. These categories are constructed using information compiled from both clickstream data and IP information. Behavioral marketing networks with thousands of participating websites are being developed, which allow marketers to build databases that characterize online surfing behaviors across a wide spectrum of websites, in near real time. Marketers using behavioral techniques can then target these consumers by serving ads tailored to the predefined segments or categories. This is an example of a classic marketing technique that is made much more practical by Internet technology. The Internet isn’t essential to the practice of behavioral marketing, but it can greatly add to its effectiveness.

HOW IT WORKS

So how does it work? Generally, you’re being tracked as you surf the net using Adware, or tracking cookies on your computers. Adware is a dirty word to a lot of people, and is often lumped in with Spyware. What’s the difference? As I’m defining it here, Adware has no “mal intent” like some Spyware, and is fully disclosed and consented to. It is used strictly to track behavior and activities online, for the purpose of categorizing the surfer into a preset category, then serving an Ad targeted to that group. Not to steal your identity, or empty your bank account (at least not without your knowledge!).

IS IT A GOOD OR A BAD THING?

So is this new Behavioral Marketing stuff a positive development? Like most things in Marketing, that’s in the eye or the beholder–and the hands of the user.

Extreme voices on the user side of the privacy discussion will object strenuously to anything that has even the slightest privacy implication, no matter how benign. It doesn’t matter whether the risk of abuse is slight or non-existent; they will toll the bell of alarm and protest vigorously. These folks are against just about any form of marketing that is proactive. There feeling is that marketers must wait for people to come to them. If their logic was followed, a great many innovative, productive technologies would never have found their way into common use. Thankfully, our free enterprise system isn’t that restrictive.

On the other side of this equation are the abusers of technology (I refuse to call them marketers), who will take any innovation and unscrupulously attempt to use it to their advantage–consequences be damned. Email Spammers are the most recent and dramatic example of this genre of fast-buck artists. One of the great innovations in communications in our time, email is perfectly suited to direct marketing, when used properly and responsibly. With proper targeting and a reasonable approach to permission, email marketing has strong benefits to both the marketer and the consumer. But the Spammers repetitively stuff our in-boxes with the same useless drivel, until this elegant technology becomes practically unusable for its intended purpose. By doing this, Spammers turn the flabbergasted public against even legitimate forms of email marketing, wasting a huge opportunity to conduct efficient commerce for us all.

WHAT’S THE VERDICT?

So what will it be with Online Behavioral Marketing? Will it be used just for good, or for evil as well? Since this form of marketing is really just getting started, it remains to be seen. But if history is a guide, there’s a good chance it may end up being both a blessing and a curse.

What’s your position on Behavioral Marketing? I’d like to hear your thoughts.

About Phil Morettini

Phil Morettini is the author of the Morettini on Management Tech Blog and President of PJM Consulting. Mr. Morettini has an extensive C-level software and hardware company executive background. PJM Consulting provides management consulting and interim management services to technology companies.